Field
Embodiments of the invention relate to warehouse management, and more specifically to performance monitoring and risk management of warehouses of which the merchants do not possess ownership or direct control.
Background
Many merchants contract with third-party logistics providers (“3PLs”) in order to minimize the considerable financial investment that would otherwise be required to meet their warehousing needs. Retaining a 3PL of warehousing services (“3PL warehouse”) can offer substantial time and financial cost benefits when compared with the alternative of employing warehouse staff and acquiring, operating, and maintaining warehouse facilities. Historically, however, working with a third-party warehouse has come with its own set of risks and hidden costs for the retaining merchants. In particular, the merchants become reliant on the 3PL warehouse's timely and accurate execution of the requests of the merchants, and has limited recourse if the 3PL warehouse fails to perform (e.g., the merchants can bear the financial cost of the errors, the merchants can seek reimbursement (which requires the merchants to spend time demonstrating and quantifying the nonperformance), or the merchants can choose another warehouse, which demands costly relocation and rerouting of inventory, and either selection of a new 3PL warehouse or investment in one's own warehouse).
Existing solutions trade off the fixed recurring costs of owning and operating a warehouse for unknown and variable recurring costs of retaining a potentially unreliable third-party warehouse provider. In addition, often these 3PL warehouses have different procedures (e.g., different forms, different phone numbers, different formats of reports, etc.) and therefore different interfacing requirements for the merchants to keep track of in order to deal with the 3PL warehouses. Typically, the smaller the merchant, often the more difficult the problem.